Salvadoran textile companies state that the costs of labor, security and delivery times have made the sector's operations more expensive.
The recentincrease in the minimum wageis one of the factors that has had a direct impact on the cost structure of Salvadoran textile companies. Added to this are logistical difficulties in customs offices, which have caused companies from neighboring countries to obtain contracts that were originally planned for El Salvador.
The Salvadoran union has stated that excessive bureaucracy and high production costs are the main factors that could be encouraging some textile mills to reduce operations in the country.
José Antonio Escobar, president of the Chamber of the Textile Industry, Clothing and Free Zones of El Salvador (Camtex) told Elsalvador.com that one of the companies that has shut down part of its operations, to transfer them to another country, is Fruit of the Loom.Escobar said"...'In the plant owned by Fruit of the Loom in the industrial park American Park, where a thousand people work, the company will make a reduction of about 850 positions'."
Textile businessmen say the new free zones law has caught the interest of investors and will strengthen the productive chain.
Elsalvador.com reported that "despite a series of reforms promoted under the table by the Finance Minister Carlos Cáceres, which put companies operating under the Free Zone scheme on alert, the approval of the regulations as they had been agreed between the public and private sector a year ago, "is a tremendous tool (...), a tremendous engine which will make this sector take off," said the president of the Chamber of the Textile, Clothing Companies and Free Zones in El Salvador (Camtex), Jose Antonio Escobar ".